Upcoming changes

These rates were confirmed by Chancellor Philip Hammond in Budget 2018 and are subject to future change should the UK fail to reach an agreement with the EU over its exit.

Personal

Income tax bands and rates

The bands and rates at which people in England, Northern Ireland, Wales pay income tax will change for 2019/20, but it will be business as usual for taxpayers in Scotland.

The following income tax bands and thresholds will be in place from 6 April 2019:

Table 1: England, Northern Ireland & Wales

Band

Taxable income 2019/20

Rate

Personal allowance

Up to £12,500

0%

Basic rate

£12,501 to £50,000

20%

Higher rate*

£50,001 to £150,000

40%

Additional rate*

Above £150,000

45%

Table 2: Scotland

Band

Taxable income 2019/20

Rate

Personal allowance

Up to £12,500

0%

Starter rate

£12,501 to £14,549

19%

Basic rate

£14,550 to £24,944

20%

Intermediate rate

£24,945 to £43,430

21%

Higher rate*

£43,431 to £150,000

41%

Top rate*

Above £150,000

46%

* The personal allowance is reduced by £1 for each £2 of income from £100,000 to £125,000 (2018/19, £123,700).

Table 3: Tax on dividends (throughout the UK)

Dividend allowance

£2,000

Basic rate

7.5%

Higher rate

32.5%

Additional rate

38.1%

ISAs

The £20,000 limit may also be used to invest in a lifetime ISA, which has a maximum allowance in 2019/20 of £4,000.

Pensions

The lifetime allowance, which is the maximum amount an individual can draw from pensions without incurring extra tax charges, rises to £1.055 million from 6 April 2019.

Capital gains tax

The capital gains tax (CGT) annual exempt amount for individuals rises from £11,700 to £12,000 from 6 April 2019. At the same time, the annual exemption for trusts increase from £5,850 to £6,000.

Business

Corporation tax

Financial year from 1 April

2019

2018

Corporation tax rate

19%

19%

Loans to participators

32.5%

32.5%

The intention to cut the rate of corporation tax to 17% in 2020/21 remains on course.

Auto-enrolment

From 6 April 2019, the minimum employer contribution towards an employee’s workplace pension will increase from 2% to 3%, while eligible employees will see their minimum contributions increase from 3% to 5% of their pensionable earnings.

These contributions are mandatory for workers aged between 22 and state pension age, earning more than £10,000 a year.

National living wage rates

National living wage rates for all ages and apprentices are increasing from 1 April 2019.

2019/20 rates

Over-25s – £8.21

21 to 24 – £7.70

18 to 20 – £6.15

Under-18s – £4.35

Apprentice – £3.90*

*If under 19 or in the first year of apprenticeship.

VAT

From 1 April

2019

2018

Standard rate

20%

20%

VAT fraction

1/6

1/6

Reduced rate e.g. on domestic fuel

5%

5%

VAT fraction

1/21

1/21

Taxable turnover limits

From 1 April

2019

2018

Registration (last 12 months or next 30 days) over

£85,000

£85,000

Deregistration (next year) under

£83,000

£83,000

Registration for distance selling into the UK (last 12 months or next 30 days) over

£70,000

£70,000

Annual and cash accounting schemes turnover limit

£1.35m

£1.35m

Flat rate scheme turnover limit

£150,000

£150,000

The VAT-registration threshold is to stay at £85,000 until April 2022.

A new VAT reverse charge for construction businesses will come into effect on 1 October 2019.

The reverse charge could put the onus on customers who buy supplies or construction services to account for VAT and report it to HMRC instead of the supplier.

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